Net worth is the number of assets owned by a person. Ney worth is not only applicable for people but also businesses and countries. It is a quantitative measurement of the financial status. By using, you can easily determine your net worth. It will help you know how far you are from reaching your ideal life.
But did you know there are different types of net worth? Yes, it is correct. There is more than one type of net worth. The net worth value can be either positive or negative depending upon the assets and liabilities. Let’s have a look at these first.
Positive Value of Net Worth
If you own more assets than the liabilities you have on your shoulders, it will give you positive net worth. This value means that a person is doing well financially. In any unfortunate condition, a person with a positive net worth would not be facing huge problems.
Negative Value of Net Worth
If you have more debts to pay off and fewer assets, net worth is negative. It means a person is not doing financially and will face problems in financial problems.
If you want to turn negative net worth to positive, either reduce the debts or increase assets. Now that you know about these two, you should know the different types of net worth.
Types of Net Worth
Net Worth in Personal Finance
It is a person’s net worth if the liabilities are taken out from the assets he owns. The liabilities can be any form, be it a car or student loan or the credit card balance. While calculating net worth, subtract the residential place you have to calculate the assets accurately. After calculating the value, you can use NetWorthSpot.com to give an accurate measurement.
Net Worth in Business
If you are calculating net worth in business, you may have heard about the term book value. Book value is the difference in the assets and debts of a company. Keep in mind that the current market value is not the net worth. It has to include all the costs that the business has spent.
The business that has been profiting will have higher book value. But if the business has been at a loss and has not paid its loans, the net worth will be negative. So naturally, this increase raises a company’s stock price as well.